Common use of Market Forces Clause in Contracts

Market Forces. The prices of structured products are affected by all prevailing market forces including the demand for and supply of the structured products. As a result, actual traded prices of a structured product can be higher or lower than its theoretical price. Customer trading structured products with underlying assets not denominated in Hong Kong dollars is also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the price of the structured products. Although structured products have liquidity providers, there is no assurance that Customer will be able to buy or sell the structured products any time he wishes. Corporate actions affect the value of the underlying stocks which in turn affect the value of the structured products. Adjustments may or may not be made to the terms of the structured products (such as entitlement ratio, exercise price, etc.) depending on the terms and conditions set out in the listing documents. Adjustments will not be made to the entitlement ratio of inline warrants due to its product nature. Where adjustments are to be made, the adjustments will only become effective (the "Effective Date") when all necessary parameters can be determined. The prices of the structured products may be volatile from the ex-entitlement date of the underlying stocks until the Effective Date. Customer should exercise particular caution in trading those structured products during that period. In addition, no adjustment will be made to those structured products that expire within that period. Other factors being equal, the value of derivative warrants will decrease over time. Therefore, derivative warrants should never be viewed as products that are bought and held as long term investments.